Health Reform Innovation

Recent events in Canberra have put the spotlight on the need for policymakers to improve how they communicate the message of economic reform.

In the wake of the failure of the federal government’s Medicare co-payment plan, might I suggest that the health reform debate needs to be framed not around spending cuts, or higher taxes, or addressing budget deficits and debts.

Instead, the debate needs to be refashioned around the prospect of offering ordinary voters and taxpayers something better than the Medicare status quo.

This is why we need to talk about health reform in terms of innovation, especially when in modern political parlance, the term reform has become a dirty word synonymous with the creation of ‘losers’.

The CIS has already contributed to trying to recast the health debate and communicating the message and substance of reform.

CIS Senior Fellow David Gadiel and I have devised a Health Savings Account proposal that would allow individuals to opt out of Medicare, cash out their annual health entitlements, and deposit their own health dollars, their own taxes, in a health savings account.

Based on the much more cost-effective Singaporean health system, the political logic behind our opt-out plan is that as well as contributing to long-term health system and budget sustainability, individuals would gain financially by opting for a more efficient way to finance their own health care.

I also believe our plan embodies the kind of principles that need to be front of mind when think about health policy innovations and whether they would address the core structural issues facing the health system.

Our plan would:

• Establish non-government sources of health funding
• Increase personal responsibility for health expenditure
• Transform health insurance from a payment mechanism to a risk management mechanism
• Shift delivery of health care to financially responsible private sector operators
• Change incentives for health care providers to focus on outputs and outcomes

The real challenge in reform innovation is to find ways of doing things better in health and communicate the benefits to the Australian public.